India’s growth ‘hamstrung by accountancy protectionism’

Sir Mike Rake has criticised the regulatory climate of India’s accounting
profession, warning that the country’s economic development is being hampered by
the situation.

Sir Mike’s comments came after a sustained groundswell of opposition
from major international accounting firms as they have been frustrated by
India’s resistance to allowing them to develop large local businesses. India’s
continuing efforts to shield  its audit marketplace from foreign firms has also
been a bone of contention. 

Firms can service no more than 30 statutory audit clients per partner and
local Indian firms are forbidden from joining a ‘Big Four’ international network
unless the network’s chiefs agreed not to have any other offices in the country.

Indian firms are also restricted to employing 20 partners while the number of
new students allowed to be taken on annually at larger firms is limited to a
ratio of two per partner.

Sir Mike believes that an accounting overhaul is needed if the emerging
market is to realise its full economic potential: ‘The restrictions put in place
in India are inevitably going to hold back the ability of the profession to
train accountants to service a fast growing economy,’ the FT reported.

Related reading